More of the Bush economy: United Airlines can dump pension plans
United’s about to give the shaft to over 120,000 workers; Darth Cheney’s secret energy committee seems only to have resulted in outrageous gas prices that the airlines are sinking fast.
Welcome to the Bush economy. United Airlines is going to dump its underfunded pension plans onto the taxpayer to survive bankruptcy. Yes, this would be the largest default in the history of the Pension Benefit Guaranty Corp (PBGC). U.S. Bankruptcy Judge Eugene Wedoff ruled that $6.6 billion of liabilities can be shifted to the PBCG, which will result in reduced retirement payouts to United workers – flight attendants, ground workers and pilots — all 121,500 active and retired employees.
This should scare everyone; it could lead to a disaster of savings & loan debacle proportions if a big fish like Ford or GM tanks and tries this maneuver. (LAT):
The ruling fueled speculation that other major airlines — which also are suffering huge losses — might try to ditch their pension plans to avoid being at a competitive disadvantage to United, the second-largest U.S. carrier, behind American Airlines.
…Wedoff said that transferring the pension plans to the federal agency didn’t violate any law or United’s union contracts, and that reduced benefits were better than having the airline go under.
“The least bad of the available choices here has got to be the one that keeps an airline functioning, that keeps employees being paid,” Wedoff said. United, based in suburban Chicago, is the busiest airline at the Los Angeles and San Francisco airports, and about 4,000 of its 61,000 active employees live in California, along with thousands of United retirees.
United has lost nearly $10 billion since the Sept. 11, 2001, terrorist attacks, including $1.6 billion in 2004. The carrier, like many other older so-called legacy airlines, has been hurt by soaring fuel costs, widespread fare cutting, relatively high operating costs and the growth of low-cost discount airlines such as Southwest Airlines and JetBlue Airways. It filed for Chapter 11 bankruptcy protection in December 2002.
United’s unions say that missteps by airline management over the last several years also are to blame, and that they’ve been asked to make excessively steep concessions.
But United Chief Executive Glenn Tilton — a former oil industry executive who took United’s helm in September 2002 — has pushed hard for the labor concessions and the pension plan switch, saying they’re the only way the airline can climb out of bankruptcy.
You will note below that they are trying to blame the unions for this, but sh*t, you know the top-level execs have been flying high with bonuses regardless of the airline’s performance. When the rubber hits the tarmac, though, they first go after the workers.
How about Chimpy’s energy policy — you know the one developed by all the pigs at the trough like Ken Lay. The ones you’ll never know the identities of because the courts have ruled that those meetings with Dick Cheney are privileged conversations?
It’s no wonder that strikes are threatened.
But the pact has outraged some United unions, and the airline’s employee situation “has become extraordinarily volatile,” said Ron Kuhlmann, vice president of Unisys R2A Transportation Management Consultants in Oakland.
The Assn. of Flight Attendants has threatened random, unannounced strikes against United flights if the pension plans were transferred. The association represents about 15,500 United flight attendants. United warned them last week that they could be fired if they walked off the job.
Association spokeswoman Dianne Tamuk said, “We feel sold out” by the ruling, and said that the union would meet to decide its next step.
“A strike is a real prospect if that agreement is approved,” Jack Carriglio, a lawyer for retired United pilots, said at the hearing. “Also, this will have a grave impact on United employees’ morale.”
Under federal pension law, the PBGC pays no more than $45,613 a year to a worker who retires at age 65; it’s less for those retiring at an earlier age. As a result, United’s pilots are expected to take the greatest hit to their pension benefits. They commonly earn six-figure salaries while working, but under federal law they must retire at age 60.
Moreover, United and most of its union employees have another battle to wage. United also is asking Wedoff to throw out the airline’s wage-and-benefit contracts with most of its employee groups, so it can secure the more than $3 billion in annual labor savings — aside from the pension costs — that United says it needs to survive.
A hearing on that request begins today, and some United employees have threatened to walk out if the carrier wins that contest as well.